April 1, 2005 (Vol. 25, No. 7)
Industry Shaken by Highly Publicized Shortages, Withdrawals, and Violations
The pharmaceutical industry has become an easy target for critics, and that negativity is spilling over into public polls, garnering a bad reputation for the entire industry.
In a Kaiser Family Foundation poll, released February 25, 70% of the 1,200 Americans surveyed said, “Pharmaceutical companies are most concerned about making profits, and they put profits ahead of people.”
On the issue of trustworthiness, pharmaceutical companies were ranked seventh in a list of nine industries, less trustworthy than HMOs, but more trustworthy than oil companies and tobacco companies. This, in spite of the fact that the pharmaceutical industry is the most philanthropic industry in the U.S., according to The 2004 Corporate Contributions Report by The Conference Board.
Why the disparity? At some level, “There’s a traditional public reaction model at work here. The public wants access to better drugs to treat diseases, but they don’t like the drug companies as a whole,” notes Jenny Moede, senior vp, Waggener Edstrom Bioscience (www.wagged.com).
“Frankly,” Moede says, “the drug companies have had too much financial success for the American public. People begin assuming that financial success is the only motive of these companies, and that’s unseemly.”
Furthermore, Robin Hogen, vp of public affairs, Purdue Pharma (www.purduepharma.com), says, “There is a small, vocal group in Washington, D.C., that has seized on this as a populist argument,” saying that pharmaceutical companies are profiteering on the misfortune of others.
“But,” Moede continues, “with the exception of a few major biotech companies, the biotech industry hasn’t achieved widespread, consistent financial success. So the general public translates this to they must be motivated by something other than money, like human health and wellness.’
“As more and more biotech companies achieve profitability and market traction, their ability to maintain a balance between meeting shareholder demand and prioritizing the well-being of their patients through scientific and care advancements will be critical.”
Another reason for the disdain is that overall healthcare costs tend to be invisible, reimbursed, often directly, by third-party payers, while prescriptions may be paid for, at least initially, by patients. “It goes to a fundamental problem: Everyone wants the best healthcare in the world, but wants somebody else to pay for it,” Hogen says.
Recent news hasn’t enhanced the industry’s image, either. The shortage of flu vaccine last autumn, followed by Merck’s Vioxx withdrawal, conflicts of interests at the National Institutes of Health, the March withdrawal of Biogen-Elan’s Tysabri, an FDA warning regarding “potentially life-threatening muscle damage” among Asian patients using AstraZeneca’s Crestor, and the seizure of GlaxoSmithKline’s Paxil CR and Avandamet tablets over GMP violations all contribute to increasingly skeptical consumers.
“I don’t think people see biotech in the same light as pharma,” notes Tony Russo, CEO of Noonan Russo, a division of Euro RSCG Life PR (www.eurorscg.com). He may be right. “The response to biotech is overwhelmingly positive,” according to Michael Werner, chief of policy, BIO (www.bio.org). “Our message, the promise of biotech, is being heard.”
Communication
The pharmaceutical industry has become an easy target for critics, and that negativity is spilling over into public polls, garnering a bad reputation for the entire industry.
In a Kaiser Family Foundation poll, released February 25, 70% of the 1,200 Americans surveyed said, “Pharmaceutical companies are most concerned about making profits, and they put profits ahead of people.”
On the issue of trustworthiness, pharmaceutical companies were ranked seventh in a list of nine industries, less trustworthy than HMOs, but more trustworthy than oil companies and tobacco companies. This, in spite of the fact that the pharmaceutical industry is the most philanthropic industry in the U.S., according to The 2004 Corporate Contributions Report by The Conference Board.
Why the disparity? At some level, “There’s a traditional public reaction model at work here. The public wants access to better drugs to treat diseases, but they don’t like the drug companies as a whole,” notes Jenny Moede, senior vp, Waggener Edstrom Bioscience (www.wagged.com).
“Frankly,” Moede says, “the drug companies have had too much financial success for the American public. People begin assuming that financial success is the only motive of these companies, and that’s unseemly.”
Furthermore, Robin Hogen, vp of public affairs, Purdue Pharma (www.purduepharma.com), says, “There is a small, vocal group in Washington, D.C., that has seized on this as a populist argument,” saying that pharmaceutical companies are profiteering on the misfortune of others.
“But,” Moede continues, “with the exception of a few major biotech companies, the biotech industry hasn’t achieved widespread, consistent financial success. So the general public translates this to they must be motivated by something other than money, like human health and wellness.’
“As more and more biotech companies achieve profitability and market traction, their ability to maintain a balance between meeting shareholder demand and prioritizing the well-being of their patients through scientific and care advancements will be critical.”
Another reason for the disdain is that overall healthcare costs tend to be invisible, reimbursed, often directly, by third-party payers, while prescriptions may be paid for, at least initially, by patients. “It goes to a fundamental problem: Everyone wants the best healthcare in the world, but wants somebody else to pay for it,” Hogen says.
Recent news hasn’t enhanced the industry’s image, either. The shortage of flu vaccine last autumn, followed by Merck’s Vioxx withdrawal, conflicts of interests at the National Institutes of Health, the March withdrawal of Biogen-Elan’s Tysabri, an FDA warning regarding “potentially life-threatening muscle damage” among Asian patients using AstraZeneca’s Crestor, and the seizure of GlaxoSmithKline’s Paxil CR and Avandamet tablets over GMP violations all contribute to increasingly skeptical consumers.
“I don’t think people see biotech in the same light as pharma,” notes Tony Russo, CEO of Noonan Russo, a division of Euro RSCG Life PR (www.eurorscg.com). He may be right. “The response to biotech is overwhelmingly positive,” according to Michael Werner, chief of policy, BIO (www.bio.org). “Our message, the promise of biotech, is being heard.”
AG Biotech
As ag biotech has learned, “consumers don’t care one whit about the value to the farmer; all they care about is the value to themselvessafe food, delicious produce, good-looking veggies, etc.,” Moede says. Drug development companies need to understand that mindset. “It’s not about how their profits help them fund more research,” she emphasizes, “it’s about the value to their patients.”
Pharmaceutical companies “all have a good story to tell,” Hogen says, that can emphasize that value to patients, but may not tell them because scientists often aren’t good at communicating with the public.
Traditionally, “the pharmaceutical industry had lacked a charismatic spokesperson,” who could challenge falsities and put the facts on the table. “We need to be assertive, proud, and vigilant,” Hogen maintains.
“The bottom line in a successful communications program is determining and communicating the value of these products to patients. Without patient education, awareness building, and support, market acceptance will be limited,” Moede says. “We need to reverse-engineer the profits, or potential profits, to find the engine behind it all, the patients.”
Cost Controls
Unless the industry counters the growing negativity, the calls for drug importation may change to calls for cost controls. In the recent Kaiser poll, 82% of the respondents said lowering prescription costs was very important, and 59% indicated that “prescription drugs increase overall medical costs in the U.S. because they are so expensive.”
Although 91% ranked pharmaceutical R&D as very or somewhat important and 65% supported more regulations to limit the price of prescription drugs, 70% of the latter group thought price regulation was a good idea, even if it decreased R&D.
Herman Groen, Ph.D., CSO of IQC, a Dutch biopharmaceutical company developing anti-anthrax therapies, says that “under price controls the government would dictate the extent of the profit a company can make. It would not be a good thing for companies, and would keep companies from working in that price-controlled area.
“There is a risk that the mandates may be handed down by people who do not have the full scope of the costs associated with drug development so that these standardized drug prices will inadequately reflect the costs of drug development,” Dr. Groen continues. The long-term results could be devastating.
“Over the next 50 years, there will be some harmonization of prescription prices anyway,” Ross says. “All the world has price controls, and we don’t have any. In a highly developed country, consumers will pay one-tenth or one-twentieth as much for a prescription as we do in the U.S.
“People don’t understand why prescription charges outside the U.S. are so much cheaper,” Russo says. “Pharma says R&D’, but that doesn’t resonate well with the American public. That’s an intellectual response,” to an emotional issue, “so pharma is blamed for high costs.”
The talk of price fixing is a poignant counterpoint to the deregulation that has occurred throughout the U.S., notably of the phone system and airlines, in the past century.
Price regulation would diminish the research-based pharmaceutical industry, Hogen says, and “our healthcare system would be poorer for it.” Nonetheless, Ross says, “There’s still a need for new medicines, and pharmaceutical companies still make money”and will continue to do so, even with price caps.
